TPApril Posted December 1, 2023 Posted December 1, 2023 So - I know that ultimately the Plan Sponsor is responsible for all plan compliance, and this is clearly stated in any service agreement with a TPA. In this case, prior TPA did not seem to communicate effectively that a new plan set up a few years back had a 5500 requirement. In fact, they are a large plan with an audit requirement attached to the 5500. There are more circumstances related to lack of consulting services, such as creating a Plan Doc that wasn't really a fit for the organization. As a result there are major, and costly corrections that need to be made. I think there is no recourse, due to my first statement above, but just wondering about any other similar experiences. The Plan Sponsor wants to press the prior TPA for costs incurred due to negligent servicing.
Lou S. Posted December 1, 2023 Posted December 1, 2023 Refer them to their legal counsel for any such questions unless you are an attorney. Tell them it is outside the scope or your services or expertise. RatherBeGolfing, Bill Presson, Luke Bailey and 1 other 4
RatherBeGolfing Posted December 1, 2023 Posted December 1, 2023 1 hour ago, TPApril said: I think there is no recourse, due to my first statement above, but just wondering about any other similar experiences. The Plan Sponsor wants to press the prior TPA for costs incurred due to negligent servicing. Very few contracts are bulletproof, but is it worth the cost and headache to maybe be able to shift some of the burden to the prior service provider? I agree with Lou, refer them to outside legal counsel. Also, consider that there are probably three sides to the story: the client's side, the TPA's side, and the truth. Lou S., Luke Bailey, Paul I and 1 other 4
ESOP Guy Posted December 1, 2023 Posted December 1, 2023 Not a lawyer but all TPAs have E&O insurance for a reason. We are required to act in a professional manner and can't be negligent and just say, "well the PA has the only legal responsibility". But as noted this is for a lawyer to opine on if it is worth the legal fight. Luke Bailey, Paul I and Lou S. 3
RatherBeGolfing Posted December 1, 2023 Posted December 1, 2023 48 minutes ago, ESOP Guy said: Not a lawyer but all TPAs have E&O insurance for a reason I know some that don't, or at least did not have E&O for many years...
Popular Post Peter Gulia Posted December 2, 2023 Popular Post Posted December 2, 2023 Recognizing RatherBeGolfing’s observation that the truth might not be one-sided: If you help uncover the past, get the plan sponsor/administrator’s attorney to engage you to assist her. That way, what you communicate to the attorney can be shielded under evidence-law privileges for lawyer-client communications and attorney work product. PamR, Paul I, Eve Sav and 5 others 8 Peter Gulia PC Fiduciary Guidance Counsel Philadelphia, Pennsylvania 215-732-1552 Peter@FiduciaryGuidanceCounsel.com
Popular Post Ilene Ferenczy Posted December 5, 2023 Popular Post Posted December 5, 2023 First, i agree that an attorney is needed to assess whether someone has a case. Second, be aware that anyone providing services has a standard of care that is required and not fulfilling a contractual obligation is breach of contract. So, there may be a cause of action here. It depends on (a) what the TPA agreed to do; (b) what conditions needed to exist before the TPA had that duty (e.g., receiving data, being paid, etc.); (c) what limitations there are on liability in the TPA service contract; and (d) what limitations there are on how litigation can take place (e.g., statute of limitations, arbitration or mediation vs. litigation, etc. as stated in the TPA contract). Last but not least, the client should have an attorney send a demand letter to the TPA ... there is a lot of potential for results between the bad action and litigation .... Many TPAs are willing to stand behind their work. If nothing else, this is a good illustration of what I keep telling TPAs who do not think they need a service agreement! Stuff happens! Ilene Lou S., RatherBeGolfing, Bill Presson and 3 others 6
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now